Landlord Guide On Referencing Tenants
Written by The Landlord on 09 Nov 2011With so many landlords getting bent over and royally screwed over by tenants getting caught in the arrears trap, I’m still surprised by the amount of landlords that are so cavalier about their tenant referencing methods. Literally, by taking a few extra referencing precautions, which take no time at all, landlords can almost immediately separate the wheat from the chaff. For the record, just so no one throws a hissyfit, in no shape or form am I implying that tenants don’t equally get screwed over by rogue landlords- but that’s another issue all together! You get me? Good.
A lot of landlords make the fatal mistake of accepting the first tenant that comes along because their primary concern is focused on filling the vacant property as quickly as possible. While that may make the most financial sense to a simpleton, it can actually bear the most cost.
Problematic tenants can be expensive in so many ways. I’d personally rather keep my property vacant a little longer if it means I’ll gain tenants that make me feel at complete ease. I can swallow paying a month’s mortgage out of my own pocket because that WILL be cheaper than harbouring problem-tenants that have no qualms with wiping their arse on the carpet, and other deviant acts that will irritate my aura.
Sadly, a landlord can never be sure how good or bad a tenant is going to be until they actually move in and take tenancy for a few months. That risk factor will always be there, regardless of how genuine the tenants initially seem. However, there are steps a landlord can take to ensure they’re minimizing their risk of harbouring shitty tenants, which brings me to the issue of referencing tenants.
Methods of Referencing Tenants
I’m sure many landlords have their own methods of referencing tenants that differ from mine, but below are a few of the precautions I take as part of my “tenant referencing” protocol.
Gut instinct
I personally believe that one of the greatest tools to identity a rogue tenant is by relying on gut instinct.
I’m sure a lot of landlords have shown prospective tenants around their property and thought, “Hmm I’m not sure I want these people living here”, I know I’ve thought that on many occasions. From my experience, if it looks like a chav, smells like a chav and walks like a chav, it’s probably a chav.
Unless I’m completely comfortable with my prospective tenants, I don’t bother wasting time on trying to convince myself they’ll result in being good tenants.
If your prospective tenants make you feel uneasy, it’s probably for a good reason.
Ask for I.D
Before you even start the process of deciding whether someone is a potential tenant or not, make sure they’re actually who they say they are.
If the prospective tenant seems interested, and you’re also feeling a good vibe, then ask for I.D. I always ask for photo-proof to confirm identification- password or driving license will do nicely.
Use Tenant Credit Check Service
Credit checks are often neglected by self-managing landlords, and that’s a sin if ever I’ve seen one.
I never used to run credit checks on my tenants, but as I gained more experience I realised the quantity of undercover scammers are quickly multiplying like a plague. Granted, credit checks aren’t bulletproof, they won’t guarantee “perfect tenants”, but they will reduce a potentially large risk.
Credit checks basically look into the financial history and current state of an individual. They are relatively cheap, and in my opinion, worth the investment.
In order to perform a credit check, you will need permission from the perspective tenant. The applicant will need to sign a release form, authorizing the landlord/agent to perform the check. Most credit check companies will provide landlords with a form online.
Here is a List Of Tenant Credit Check Services For Landlords. Discount letting actually offer a FREE credit check service for landlords, so it’s not even like cost has to be an issue. There really are no excuses.
Whichever credit check service you decide to use, make sure you know what kind of security checks they’re going to do for you. Some are just pointless.
Tenancy Application Form
I always make prospective tenants fill in a Tenancy Application Form before or during a viewing. It requires the tenant to provide the following:
- Tenancy details: property address, rental period, number of applicants, proposed tenancy start date.
- Tenant’s personal details: tenant’s name, contact details, and time at current address.
- Current Landlord: details about current landlord.
- Referee / Guarantor Details: details about guarantor
- Employment details: current and past employment details, and details regarding salary
- Details about occupiers: details about all the people that will occupy the property
- Other details: details such as smoking status, pet status
The form is useful because it provides details of employment and previous/current landlords. That will allow me to follow up their references and make sure they’re legitimate and have a good track record. Additionally, if I have a vacant property which is receiving interest from several prospective tenants, I will have a neat list of all applicants with all their details. It makes it much easier to manage the applicants details, and determine which applicant is most desirable, which will effectively help me choose the better tenant. For example, I can easily see which applicant has a greater salary and stronger rental history.
You can download and/or find out more details about a Tenancy Application Form.
Assessing Affordability
Regardless of whether your tenant is in receivership of Housing Benefit or a salary from full-time employment it’s important to assess whether your prospective tenant can actually afford your property.
Based on your tenants total monthly income (remember to check recent pay slips), assess whether or not you think they can realistically afford your property and all its added expenses, taking into account a budget for life’s social events.
I’ve seen it happen many times before, where a tenant gets totally excited by the prospect of renting a house which they’ve fallen in love with, and not realising that they can’t realistically afford it. Some times as a landlord, you need to do the maths for the tenant and make a calculated decision. Tenants are often ruled by their heart, neglecting their head. I guess it’s the same when it comes to women and shoes.
If after crunching the numbers, it seems unlikely your tenant will be able to pay the rent for the long haul, it maybe something to seriously think about.
Ahh the wonder that is Facebook; probably one of my favourite and potentially most entertaining methods of referencing tenants.
Basically, when someone applies to be my tenant I always look them up on Facebook, by searching for their name and/or email address . 7 times out of 10 (I pulled those odds out of my arse, but they seem realistic enough), the applicant has a Facebook profile, giving me the opportunity to get a snapshot into their life. If lady luck is on my side, the profile will be completely insecure, allowing me to view the entire visual catalogue of the applicant’s life.
I’ve actually refused a tenant in the past based on what I saw on their Facebook profile. You can read about that delightful story here, The Results Of Referencing Prospective Tenants On Facebook.
Conclusion
As said, doing all of the above doesn’t take long at all, and it’s well worth the minimal effort it requires. Moreover, you can do all of the above for FREE. There really are no excuses.
Out of curiosity, does anyone else have any other weird and wonderful methods of referencing? I’m always looking to develop the ways of how I can harass prospective tenants.
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13 Comments - join the conversation...
I have used facebook before, actually to track down a ex-tenant who owed arrears.
One of my searches found the adult dating profile of a prospective tenant!
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Ha, these suggestions are all getting borderline creepy, but I like it :)
@AUS
Agreed, nothing is foolproof. And the steps I mention do simply what you said, limit potential risk.
In regards to LinkedIn, it's no way near as popular as Facebook, that's why I never mentioned it. But still worth a shot.
@NS1
Yeah, Googling names/email addresses some times brings up results, I've also noticed that. But I still think Facebook is the most reliable right now.
@Armin
Never thought of using localised forums. But I like the concept of your suggestion. I've never looked into forums to try and find tenants- how popular are they exactly?
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The Sheffield forum is *extremely* popular, but I think it's mostly an aberration, i.e. an unusual exception. In theory other locales in the UK might have similar web communities, but I haven't really seen any. Which might be due to me only really bothering about the place where I live and the place where my BTL is.
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* Get a utility bill from their previous address.
* Do a land registory check to find previous landlord.
* Independently obtain landlords contact information
George
http://makeurmove.co.uk
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My personal favourite experience though was from a middle-aged couple who wanted to rent a house from me. He was apparently a private language tutor and she was a mobile hairdresser. They were very well spoken but something just didn't add up about them, so just out of chance I put both their given mobile numbers in Google.....It came up with links to private escort directories for him and her!!! Needless to say, they didn't get the house!
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I have been trying to get rental shortfall and legal insurance for a while now. The reason why I find it difficult is because the insurance will only cover me for those things if they consider the tenant to be very low-risk. The insurance company insists I use an accredited tenant referencing service (in my case FCC Paragon), but those referencing agencies will not give a reference unless the applicant is pretty much bullet-proof. I.e. substantial income, no bad debt, no CCJs, no bankruptcy within the last 5 years etc etc.
And each tenant/guarantor referenced costs £42. I have blown a decent chunk of money on such checks so far and I'm starting to think that it might not be worth while.
Hope that helps you.
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I initially started this website because I wanted to document my every step from property idiot to property landlord,
in hope that people would find my site and help me along the way. I literally didn't have a clue about being a landlord
when I started this website.
I know that it is common practice overseas for prespective tenants to create a 'tenant profile' statement and accompany it with a ledger of their current/past rent payments. This is something I find a little OTT and frankly sort of no-one else's business however it does 'impress' if someone has taken the trouble to try and show their financial viability and background.
I still believe that nothing is foolproof, all a landlord can do is try and mitigate as much risk as possible.
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